For investors, stock price changes over time play a crucial role in portfolio growth. A company’s performance and market trends affect these changes, influencing decisions on whether to buy, hold, or sell.
Fear of missing out (FOMO) often pushes investors toward high-profile stocks, particularly in technology and consumer sectors. But what if you had invested in MasterCard (NYSE: MA) a decade ago? Would it have been worth holding onto? Let’s take a closer look at how an initial $1,000 investment in MasterCard would have performed over the years.
MasterCard’s business and market position
MasterCard, founded in 1966 and headquartered in Purchase, New York, is one of the world’s leading payment solutions companies. It provides services for credit, debit, and contactless payments, enabling financial institutions, businesses, and consumers to transact seamlessly.
The company offers payment programs, transaction processing, and various digital solutions. It generates revenue primarily from transaction fees and assessments based on the total dollar volume of activity on MasterCard-branded cards.
MasterCard operates globally, with 33.3% of its revenue coming from North America and the remaining 66.7% from international markets. The company also owns and licenses well-known payment brands, including MasterCard, Maestro, and Cirrus.
A look at MasterCard’s performance over the decade
MasterCard has consistently expanded its global footprint and strengthened its market dominance. Its proprietary payment network connects issuers and acquirers worldwide, enabling smooth transaction processing in over 210 countries and 150 currencies.
The company has benefited from the increasing adoption of digital and contactless payments, driving higher transaction volumes. In addition, MasterCard has made strategic acquisitions to enhance its services, further expanding its market reach.
How much would a $1,000 investment in MasterCard be worth today?
If you had invested $1,000 in MasterCard in October 2014, your investment would have grown significantly over the past 10 years. Based on stock price appreciation alone (excluding dividends), your investment would now be worth approximately $7,006.56, reflecting a 600.66% gain as of October 23, 2024.
To put this into perspective:
- The S&P 500 index increased by 203.63% over the same period.
- Gold returned 111.96%, a much lower performance compared to MasterCard’s growth.
This massive return highlights the strength of MasterCard’s business model and its ability to thrive in the evolving financial landscape.
What’s next for MasterCard?
Looking ahead, analysts expect continued growth for MasterCard. The company’s expansion into digital payments, cross-border transactions, and fintech partnerships positions it well for further gains.
MasterCard’s strong cash flow allows for ongoing share repurchases and dividends, benefiting long-term investors. However, challenges remain. Rising operating expenses—expected to increase by over 10% in 2024—and higher rebates and incentives may pressure profit margins. Additionally, the stock’s valuation appears higher than the industry average, warranting a cautious approach for new investors.
Despite these concerns, MasterCard’s stock has gained 5.25% in the past month, with multiple upward earnings estimate revisions for fiscal 2024.
Bottom line
MasterCard has been a winning investment over the past decade, significantly outperforming the broader market. A $1,000 investment in 2014 would be worth more than $7,000 today, demonstrating the power of long-term investing.
As digital transactions continue to rise, MasterCard remains well-positioned for future growth. Investors should weigh its strong fundamentals against potential risks, but those who held onto MA stock over the years have been well rewarded.
